Brazil slam-dunking
Valor Econômico - 06/06/2008
The Brazilian companies adopt the best practices of corporative governance among the Latin-American companies. A study made by the Spanish sustainability consulting company Management Excellence with the 50 non-financial companies with highest market value shows that, among the top 25 companies with the best governance, 18 are Brazilian. Among the top five, only one is not Brazilian, Wal Mart Mexico. The size of the Brazilian market, the development of the New Market (Novo Mercado) and the fact that many of those companies hold ADR (American Depositary Receipt) partly explain such leadership. The first company of the ranking is CPFL, which meets 92.68% of the good practice requirements analyzed in the study. Nonetheless, the work reveals that there are still many flaws in the way the companies exert such governance. Among the 41 good practices' criteria analyzed in the companies, the ones they follow the most are the basic topics, which, in some cases, are even mandatory. Regarding the most modern ones, few companies comply with those criteria. Among the topics the Latin American companies follow the most are: to publish balance sheets (96% of the interviewed companies do it); to hold a transparency policy (94%); to disclose the purposes of the company and the responsibilities of the Board of Directors (94% each); to have an audit committee or something similar to it (92%); to have, in the committee, members specialized in finances (90%); and to have specific governance rules (90%). On the other end the requirement which is less followed by the companies is the publication of information on copyrighted material (only 10% do). Only 12% of them keep a succession committee and 26% have a governance committee. Only 30% publish transactions between related parties and only 30% of them require that the members of the administrative board and the board of directors inform whether they have material interest in transactions or businesses that affect the company. There are other flaws in the transparency of the Latin American companies. Only 38 companies publish who their main shareholders are, and only 21 reveal the risk factors for the business.